Natural Gas Inventory Above The 5-Year Average

Natural Gas futures on the Nymex had a volatile week before closing 3.8% higher than the previous one at $3.76. EIA reported a draw of 136 Bcf in working underground stocks for the week ended December 24. Inventory is currently at 3,226 Bcf, 7.2% lower y/y, 0.6% above the 5-year average.

We had been anticipating range-bound behavior below latest resistance as the market is taking a breather. Trading volumes have been thinner lately and the price is looking ready to reach lower lows on the continuation of the post-winter downtrend. The next Daily MACD bearish crossing will test support around the $3.30 level. We are currently expecting another 20% in downtrend and we will soon have to identify a seasonal floor for this market as the shoulder contracts will be trading in larger volumes.

We were looking at a seasonal ceiling back in October as we felt contempt for anything above the $5.00 and the latest U.S. LNG deliveries to Europe, which has been hit hard by the energy crisis, are showing already how important tool the pricing will be for the future of the American natural gas. Furthermore the domestic gas-fired electricity generation market share will have to be preserved at all cost. U.S. macro data and the Dollar Index to be monitored routinely. Daily, 4hour, 15min MACD and RSI are pointing to entry areas.


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